DAVID CAMERON faced an internal inquiry yesterday into claims he "maxed out" his second home expenses.

DAVID CAMERON faced an internal inquiry yesterday into claims he "maxed out" his second home expenses.

The Tory leader took out a £350,000 taxpayer-funded mortgage and then paid off a £75,000 loan soon afterwards.

The financial juggling may have cost taxpayers as much as £22,000.

Cameron said he had not broken any rules but agreed to be investigated by the "scrutiny panel" he set up last month to investigate Tory abuses.

Asked if he had failed his own "smell test" - that it broke the spirit if not the letter of the rules - he limply responded: "It's absolutely for others to make that decision."

But he said he would repay the money if found guilty.

Gordon Brown moved to seize the initiative by setting out plans for a legally-binding code of conduct for MPs, peers and other public servants.

He said the code would apply not just to MPs but organisations such as the BBC and the NHS, which are also publicly funded.

Labour called on Cameron to publish all the documents so the public could see if he had cheated the taxpayer. He took out a £350,000 mortgage on a constituency home in Oxfordshire when he became an MP in 2001.

By declaring it as a second home he was able to claim around £20,000 a year from the taxpayer towards the cost of the mortgage.

Within four months of buying the property, the millionaire Tory leader paid off the outstanding £75,000 he owed on a house in London.

Experts have calculated that if he had kept the loan on the London home and borrowed £75,000 less on the Oxfordshire home, he could have saved taxpayers £22,000. Cameron told the BBC's Politics Show: "I think what I did was very reasonable."

He denied he could have reduced the amount the taxpayer had to pay.

He said: "First, because I was actually paying out more in interest for my mortgage than I was claiming from the taxpayer and, second, when I did pay down the mortgage, I was then able to claim for some very basic and standard bills, things like heating and lighting and water."

Brown defended his own record on expenses, saying: "I feel that I have managed my affairs personally with the utmost integrity."

Meanwhile, Lib Dem leader Nick Clegg called for Alistair Darling to resign over allegations he "flipped" his second home to beef up his claims.

But the Chancellor's spokeswoman said: "The allegation he changed addresses for personal gain is untrue."